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DNV GL’s 2017 Annual Results: Well positioned to return to growth after another year of challenging market conditions

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DNV GL is well positioned to return to growth in the second half of 2018 as market conditions across key sectors strengthen and the company reaps the benefits of becoming leaner during the extended downturn, that’s according to Remi Eriksen, DNV GL’s Group President and CEO.

In an interview Eriksen said DNV GL has made bold strategic decisions as well as cost cutting measures that leaves the company well placed to exploit the upturn in the global economy.

“Over the last three years we have reduced our cost base by more than NOK 4 billion, so we are certainly more lean and in better shape for the prevailing market conditions,” said Eriksen.

DNV GL has experienced a few difficult years due to the slump in the shipping and oil & gas sectors and this continued into 2017. These two business areas saw revenues contract whilst Business Assurance, Energy and Digital Solutions all posted growth in revenue. DNV GL remains the world’s leading ship and offshore classification society with a market share of approximately 20%.

Across the whole Group, annual revenue decreased by 6.5 % compared to 2016. DNV GL’s operating revenues for 2017 were 19,475 million NOK. The earnings before interest, taxes and amortization (EBITA) was 947 million NOK. These are preliminary figures. The final audited figures will be issued at the end of April.

It was a year of landmarks after digitalization and customer centricity were earmarked as two of the company’s strategic pillars. The creation of the new Digital Solutions business area, consisting of almost a thousand digital experts, will work across the business to help propel the company’s digital transformation. The new organization oversaw the launch of DNV GL’s Veracity platform with customers, including ship owners and drilling companies, already using it to unlock the potential of big data. The digital drive is being embraced by customers across different sectors; 40 000 maritime certificates were issued electronically whilst 90 000 ISO certificates, were stored and secured using blockchain technology.

The company’s focus on creating value for its customers inspired the creation of the Energy Transition Outlook, which in its inaugural year went on to become DNV GL’s most successful publication. Eriksen points out that seventy percent of DNV GL’s business is related to energy, spanning from renewables, oil and gas, power distribution and transmission and energy use, and the report has opened many doors as it is filled with actionable content. He said, “it’s led to new contracts and new business opportunities and better dialogue with our customers.”

2017 was also the year when the Foundation Det Norske Veritas assumed the sole ownership of DNV GL after buying the remaining stake owned by Mayfair. Mayfair was the owner of GL and became a minority shareholder of DNV GL following the DNV and GL merger in 2013. The deal is not reflected in the Annual Report figures as the Foundation is funding the purchase. “We now have one owner with a long-term view, but with high short term ambitions. 100% of the profit made by DNV GL will remain in the group of companies to further develop and position the company globally. We will continue to invest in research, development and innovation as well as continue to take bold moves on our digitalization journey,” said Eriksen. The company is investing 5% of its annual revenues in research, development and innovation activities.

Tough trading conditions are predicted to continue during the first half of 2018, particularly in the maritime sector due to low newbuilding activity, but with all the major engines of the global economy gathering pace concurrently, the negative trend could be reversed. Eriksen said, “with the right engagement with our customers and with customer centricity as a theme across our organization, I think there is a good chance that we could see growth again towards the end of the year.”